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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

The Dialectics of the Baucus Plan

If you’re puzzled about why everybody thinks Max Baucus’ new health care blueprint is a big step forward in the debate even though pretty much nobody likes it, it’s important to understand the dialectical nature of the process. For health care reform to happen in the Senate, it needs to get out of the Finance Committee, which even on the Democratic side, is not a terribly progressive group. It also represents the last chance to lure a couple of Republicans across the line, and although none have stepped up yet, the relatively positive reaction of health industry groups (in itself not the most wonderful thing) could make it a lot easier for that to ultimately occur.
Once the Baucus bill is out of committee, the Senate Democratic leadership will design a floor package composed of elements of the Finance and (more progressive) HELP Committee bills. That’s also the point at which Senate Democrats and the White House will make the fateful decision of whether to go for broke on a cloture vote (which requires 60 Senators), or move towards use of reconciliation, at least for the more controversial elements. And all along, Democrats will be acutely aware of the need for a health reform design that can produce a conference committee report able to survive close votes in both House and Senate. And that means, for example, that the Baucus bill’s exceptionally weak state-by-state co-op system will have to be eventually revised or the whole effort could go down thanks to opposition from House Democrats.
So Baucus’ bill represents just one piece of the puzzle. Ezra Kleiin has an excellent summary today of five steps that could make Baucus’ proposal significantly more acceptable to progressives; none really does much violence to the basic scheme.
There’s one wrinkle to the Baucus plan, however, that probably will have “legs”: its back-door attack on the tax deductibility of high-end employer sponsored plans via an “excise tax.” Modifying the deduction for employer-sponsored plans is one of those things that policy wonks from all sides of the ideological spectrum tend to favor, but it’s quite unpopular. Baucus’ approach might be doable because it’s indirect, and is phased in very slowly through a threshold that will be adjusted by a consumer price index, not a health care price index (which means more and more high-end plans will be exposed to it over time). And this last feature, most significantly, means that the overall Baucus plan is not only deficit-neutral, but actually begins reducing the federal budget deficit in the “out-years.” This makes it pretty attractive to the many people who worry that we simply can’t afford health care reform.
At present the main visible opposition to the “excise tax” idea is coming from the labor movement, which has many members who have negotiated very good health plans. But if only because the threshold for future exposure to the excise tax could be changed down the road, union leaders probably won’t make this a litmus test for final support.
In any event, the significance of the Baucus plan can’t really be captured by up-or-down (mostly down) assessments of its content. There are a lot of moving parts on health care reform, and this is just one of them, albeit the final basic piece to fall into place.

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